Container shortage problem, China accelerates production, with government solutions

Container shortage problem

The global container shortage has been ongoing since the COVID-19 crisis, and has been exacerbated by the Evergreen shipping line’s Ever Given running aground blocking the Suez Canal, disrupting shipping and causing massive damage.

It is a crisis caused by multiple crises, a major problem for the trade and transportation industry, when 80% of global shipping is by sea, because it is a low-cost mode of transportation, but the cost is increasing all the time and is likely to remain high until the end of 2021.

The main cause is the outbreak of COVID-19 in each country, resulting in measures that cause economic activities to stop, labor shortages, and demand for imported goods in the United States and Europe being higher than exports, resulting in a backlog of empty containers, which has a continuous impact on increased transportation costs from bearing the cost of transporting empty containers back to the country of origin.

And on March 23, 2021, there was an accident when the Ever Given cargo ship, carrying more than 20,000 TEUs of containers, ran aground blocking the Suez Canal, which is a major waterway (the shortest shipping route from Europe to Asia and East Africa), which extended the waiting time for goods transport by weeks, causing enormous damage around the world, making the already old problem of waiting for containers even worse.

However, the private sector, including the government sector of each country, has taken measures to resolve the crisis, especially China, which began increasing container production in October 2020 and expanded by more than 111.8% from the same period last year (after previously having stopped production), resulting in a better outlook for the East-West route in the future.

The Thai government has also implemented measures to solve the container shortage problem, with the following guidelines:

1. Let the Port of Bangkok reduce the fee for empty containers imported through the Port of Bangkok by 1,000 baht per TEU for 3 months from January to March 2021, with a total operating cost of 5.28 million baht.
2. Let Laem Chabang Port compensate private importers at Laem Chabang Port for container handling costs by paying a discount of 1,000 baht per TEU for 3 months from January to March 2021, with a total operating cost of 384 million baht, including 2 items totaling 389.28 million baht.

Since Thailand itself is facing a shortage of containers, including freight rates that have doubled since last year (2020), it is necessary to quickly assess the cost-effectiveness of the operation and the benefits that small exporters receive, as well as to find a conclusion on the source of funds to be used in the operation. The Port Authority has proposed the aforementioned guidelines for the Ministry of Transport to consider in order to comply with the government’s policy to solve the problem of container shortages.

Source:

ibusiness

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